Realtor suggests avoiding taxes using bare trust loophole

A Vancouver realtor is suggesting buyers avoiding BC’s property transfer tax by exploiting the so-called bare trust loophole.

“Save on the PTT by purchasing the shares of the numbered company that holds title as Bare Trustee,” reads the realtor comments section on the Multiple Listing Service (MLS) page for a triplex in Kitsilano. “Seller is licensed Realtor”

The listing realtor for the MLS listing R2357957 is Donald F Kennedy with Sutton Group-West Coast Realty.

The owner of the property is listed as the numbered company 1069952 BC LTD.

The director of the numbered corporation is a certain Eddie Chiu according to BC corporate registry.

Province’s NDP government last fall announced that it was outlawing the use of bare trusts for the specific purpose of skirting property transfer tax 1.

“Our government has been clear that the days of skirting tax laws and hiding property ownership behind numbered companies and trusts are over. Not only is tax evasion in real estate fundamentally unfair, but it’s driving up the cost of housing for people who live and work in our communities,” Carole James, Minister of Finance said. “These changes give authorities another tool to make sure people are paying the taxes they owe.”

The realtor’s remarks appear to fall afoul of the new rules:

Starting Sept. 17, 2018, the new property transfer tax return will require people to report additional information when a transaction is structured through a corporation or trust. This will allow government to identify people with a significant interest in the property, and ensure the correct amount of tax is paid. The updated return will require the following additional information:

  • name
  • date of birth
  • citizenship information
  • contact details
  • tax identification numbers (such as a social insurance number)
    The new reporting requirements will apply to all property types, including residential and commercial. There will be exemptions for certain trusts, such as charitable trusts, and certain corporations, such as hospitals, schools and libraries.
  1. https://news.gov.bc.ca/releases/2018FIN0031-001468

5 thoughts on “Realtor suggests avoiding taxes using bare trust loophole

  1. What the new law does not capture is the fact that if a property is already owned by a numbered company in a bare trust, there is no transfer of title, and therefore no PPT return filed. All that happens is the shares change hands through a share purchase agreement, leaving the title unchanged. The seller will eventually need to report the share sale on his federal return, but the province will know nothing about it.

  2. Well.
    One can only hope the Realtor suggesting this Tax strategy has all his taxes paid in full because I’m pretty sure the CRA isnt going to be taking a vacation and ignore this.

    Happy Housing CRASH realtors!

  3. @noconfidencevote

    Respectfully…..

    Happy Housing CRASH….????
    WISHFUL THINKING.

    Yes, the market for RAgents is substantially gone. It’s called a “cycle” and cycles happen ALL THE TIME.
    Nothing new.
    Feast or Famine for RAgents.

    As for a Housing CRASH?, if that is what you are implying….. NOT GOING TO HAPPEN Here.

    Comments like YOURS show up EVERY TIME the market simmers down/corrects itself, and EVEN when the market is HOT.
    Plenty of REDDIT comments glalore about “The CRASH IS COMING….” over the past short 10-15 years.
    DO the simple research and you will see.

    ALL WISHING/HOPING/PRAYING the local RE Market will CRASH…. WISHFUL THINKING you will find your home at a 1980, 1990, 2000 market rates.

    You didnt BUY then, you WON”T BUY now, it’s HIGHLY LIKELY WILL NOT BUY in the NEAR future either.
    SAME rhetoric over and over like a broken record.

    And most likely, you’re a renter and have always been and probably will be for some time. Nothing wrong with that, it’s your choice.

    FYI – Rental vacancy rates in Vancouver have ALWAYS been low since late 80s, early 90s (as far as I recall) no higher than 4-5% back then. People complained back then about rental rates and the politicians knew back then of these low % vacancy rates for rentals.
    They even wrote about these issues in the newsprint (check it out yourself, if you either don’t remember or were not old enough to know or care).
    Fast forward to today, same complaints, same politicians (flapping their lips), same specialty groups looking for someone to blame or put the burden on.
    The ONLY difference is social media & internet, more people (MANY more people living in the “Village of Vancouver”) and they magnify the SAME issues that were around back then.

    market CRASH??? Really??
    A reasonable assumption here is You’ve NEVER even experienced a market CRASH or wouldn’t even know what a Market CRASH is.

    GL in finding your affordable 400sqft box or less, dream home in the Vancouver Proper. 😉

  4. There is no opportunity for the Real estate agent to get any commission on the sale of shares.. There’s no deposit when buying shares.
    The bigger question ..would anyone (an honest) person buy these supposed shares that may or may not represent a home. Remember your buying shares from someone or an entity that is committing tax evasion fraud..Is this someone you can trust. Really???

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